It's been a minute since my last post, and for that I apologize. I have been knee deep in trades, Spring cleaning, work, and standing up a new venture. Unfortunately the catharsis I receive from rambling on this site has been placed on the back burner, but I will try to get back to offering my worthless musings twice per week again.
Helium Network (HNT)
I FOMOed into HNT coin in early March at $7.33 after I saw what they were building out. I didn't take adequate time to fully analyze the tokenomics or the technology. Honestly, I got lucky. Unfortunately, I also let my moodiness dictate my early exit and missed out on some amazing additional gains. I scanned their website, watched some YT videos, and attempted to sign up with a company called Emrit to receive a free miner and earn a paltry 20 % commission. I say paltry, but it is actually a good way to get into HNT mining with no out of pocket costs- it just requires that other miners are already located in your area. I didn't perform due diligence into the coin and conflated a rejection from Emrit (since no other miners were in my area) as a rejection from Helium. I sold my position giving HNT the one finger salute.
Since late March I have given HNT a thorough second look adding it back as a 2.5% position in my alt portfolio. Here's why:
Utility: Helium has an outstanding use-case in a growing multi-billion dollar market.
Hotspots are setup in communities/cities in the U.S.A and Europe to create long range decentralized wifi in which IoT devices can cheaply and securely connect, collect and transfer data. It counts SalesForce, Lime, One Planet Education Network, Conserv, and LoneStar Tracking among some of their ecosystem customers. The asset tracking aspect is what really drew me back in. According to Mordor Intelligence (awesome name) the asset tracking market reached $17.14 Billion USD in 2020 and is forecasted to grow 13.45% YoY through 2026, giving it a projected market of $34.82B USB. Although not stated in the Helium plan, I believe a future use-case for Helium's wifi network build-out could include FSD (Full Self Driving) assistance, internet connectivity, and geo-tracking.
They do have plans to expand their network globally and the future use for decentralized wifi internet is limitless. There are currently over 26000 nodes in the network outpacing Ethereum by a 3x magnitude (don't worry I'm not currently comparing the utility of HNT to ETH). With a relatively low price point for hardware, expansion into additional global regions will be easy.
Technology: Uses a proof-of-coverage algorithm on its blockchain
Proof-of-Coverage (PoC) is a unique work algorithm that uses radio waves to validate Hotspots are providing legitimate wireless coverage.
The Helium blockchain uses PoC, based on a variant of the HoneyBadgerBFT (HBBFT) protocol, to verify that Hotspots are located where they claim by sending challenge, response, and witness pings to devices on the wireless network. I'm a network dude, so I like to relate this to a CDP neighbor validation in which devices are saying "Are you there?" Responding with "Yes, I am here" and then a third device validating that the device is telling the truth.
The Helium authorized network devices themselves are low power (5W), long range RF wifi hotspots. You are required to purchase devices through authorized dealers in order to join the network. They use the individual's home/business ethernet connection to transfer location data back to the blockchain.
For a full breakdown on the Tech visit Helium's document source center.
Tokenomics: Deflationary, Set Max Supply, Staking
HNT has a set maximum supply of 240M tokens. It uses a flexible deflationary burn system in which it burns HNT and mints data credits pegged to the dollar which are used by customers accessing the network. To ensure that there is always enough HNT to reward network contributors and for customers to purchase data credits a system called Net Emissions is implemented.
- Using Net Emissions, the blockchain would monitor how many HNT were burnt for Data Credits in a given epoch and add them to the number of HNT to be minted that epoch. For example, if 10 HNT were burned for Data Credits in an epoch, the system would mint 10 more HNT than were expected in that given epoch.
- Because HNT produced via Net Emissions do not add to the total outstanding, they do not violate max supply.
- However, Net Emissions would counteract the desired, deflationary effect of Burn and Mint. If the system replaces all the HNT that are burned to create Data Credits, there is no resulting reduction of supply.
- Because of this, when implemented, there will be a cap on the number of HNT that can be created via Net Emissions per epoch. When the HNT burned for DCs exceeds this cap, there will be a reduction in supply.
They have also initiated the ability to stake your HNT to earn additional passive income. Unfortunately I believe the current minimum staking requirement is 10,000 HNT so it could prove to be an expensive endeavor.
Epochs occur biennially on August 1 in which mining rewards are halved. The next halving will occur August 1, 2021. This in itself will create perceived scarcity and should help the valuation of the HNT coin to continue to increase. Currently the Market Cap resides at $1.3B USD but I believe it could easily reach a $4B MC this cycle. Don't just take my word for it though:
Token Metrics is a valuable tool I like to peruse to help me in my project picks.
Helium Mining: The new business I referenced at the beginning
I decided to start a new venture under my Holding company in which my June launch will deploy 7 HNT miners across two municipalities. Neither location has a large number of current miners; with one municipality having no miners at all. The cost of the miners is roughly $360 USD each and I hope to recoup the initial cost within one month. Even if the miners only produce .5 HNT each per day at today's valuation the mining venture will become profitable within 84 days.
Worst case scenario: my investment of $2500 produces nothing, there is an oversaturation of miners causing payouts to decrease, the HNT coin flops, and I end up writing off the assets as a business loss.
Best case scenario: my hotspots average 10 HNT per day and I average around $5K of additional monthly passive income. Initial investment paid back in 15 days.
Likely scenario: my hotspots average 5 total HNT per day and I average $2500 per month of passive income and the initial investment is paid back in 31 days.
One thing to note: I have to account & make plans for hosting fees at locations throughout the cities which will further cut into the profitability of the stated numbers; I have agreements set in place for all but one of the hotspots.
As always thank you for reading! Let me know your thoughts on Helium, the coin and the project below; also drop me a line on what you think about my new venture. Please feel free to hit up that like button if you enjoyed the content.